Can you lease a used car? second-hand car leasing deals guide

You're probably used to the concept of leasing a new car – instead of buying outright, the payment is broken down into smaller payments over an agreed rental period. But can you lease a second-hand car? The good news is that you can, and it could be an option well worth considering. 

You could say leasing a second-hand car gives you the best of both worlds. Your monthly payments are smaller than if you leased new, but you still get a fresher model, which is cheaper to run and has better technology than if you bought an older car outright. 

But how exactly does this type of car lease work? What are the advantages and what are the disadvantages? Keep reading to find out. 

Is leasing a second-hand car better than buying?

In some respects, whether you decide to lease or buy a second-hand car is down to your own personal circumstances. If you can afford to buy a newish car outright it makes sense. There’s no need to worry about monthly payments, and it could be cheaper because you’re not paying any interest.

All fine and dandy if you’re willing to splurge the cash up front, but what if you’re not? That's when leasing a second-hand car could make a lot of sense. You don’t need to generate a pile of money to get your hands on the used car you’ve been ogling in the showroom. It could even mean you can afford that dream car you’d previously dismissed as too expensive.

How does used car leasing work?

Predictably, used car leasing works in the same way as leasing a new car only – plot twist – the car in question is second-hand. 

Instead of forking out upfront, you pay an initial payment, followed by smaller monthly instalments over an agreed period. This usually runs for between 24 and 60 months. 

You’ll have a set annual mileage limit – with a by-the-mile penalty charge if you exceed it – and, unlike in a PCP finance agreement, there’s no option to buy the car outright with a final balloon payment. You pay your dues, hand the car back and move on to the next one. 

What’s the oldest car you can lease?

No figure’s set in stone, but as a general rule, you’re likely to lease a used car from a franchised dealer – so it’ll probably be no more than three years old. 

The advantage is that the car will have been put through the manufacturer’s approved-used scheme, so it’ll have been subject to a multi-point check and come with a warranty. 

Many manufacturers also include breakdown and MoT cover (a payment towards your first MoT if your car needs work to pass). 

Is leasing a second-hand car cheaper than buying a second-hand car?

Probably not. Leasing a car means paying interest that you wouldn’t have to pay if you bought the used car outright with your own cash. Also, you miss out on the saving you can make buying a car privately. 

However, there can be exceptions. Say you buy a car that’s six months old and sell it 12 months later, it’s likely that the cost of depreciation will far outweigh any savings you made on interest. 

What are the advantages of leasing a second-hand car?

The main advantage of leasing a second-hand car is that you get it by paying multiple, relatively small monthly payments – rather than having to pay the whole lot upfront. 

That could be a sensible thing to do. Instead of getting your hands on a car that’s the wrong side of ropey, likely to break down, as well as being expensive to tax and fuel, you can get a much newer model that’ll be more reliable and cheaper to run, without the worry of unexpected costs. It should also have a warranty and you may be able to factor servicing costs into the monthly payment, too. 

But because you’re still buying second-hand, you make a significant saving over getting the same car brand new on a lease – effectively, you’re taking advantage of the heavy depreciation most cars suffer in their early years. You could call it a win-win. 

What are the disadvantages of leasing a second-hand car?

One of the main disadvantages of leasing a second-hand car is that you’ll never actually own it, which could be annoying for several reasons. 

Say you buy a new car on a PCP finance deal, when you reach the end of the agreement, you’ll get the option to make a final balloon payment and own the car – tempting because you’ll know the car’s been properly looked after. It’s a less nerve-racking experience than buying a car that you don’t know has been cherished.

On the other hand, if you buy an older second-hand car outright, run it for a few years, then decide to change it for something else, you can part exchange it against your replacement, getting a handy wad of cash you’d otherwise miss out on.  

Ultimately, buying a second car outright also gives your more flexibility – you can get rid whenever you want, without incurring any extra charges. And you're not tied to an annual mileage limit, which could prove costly if your circumstances change and you’re suddenly doing a lot more driving.

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